High-deductible health plans (HDHPs) have become a standard option in many employer benefits packages, but they may not be the right fit for everyone. HDHPs remain attractive because they can offer lower premiums and can be paired with Health Savings Accounts (HSAs), yet they also shift more upfront costs onto employees before coverage kicks in.
Many large employers now offer at least one HSA-eligible HDHP, and participation is especially strong among younger workers. Still, overall HDHP enrollment has leveled off or slightly declined in recent years as employers rebalance their plan offerings.
For people using GLP‑1 medications for diabetes or obesity, or managing other chronic conditions, understanding how HDHPs work is critical to avoiding sticker shock and making the most of tax-advantaged accounts.
This guide explains what you need to know about these health plans, how they work, and the pros and cons of HDHPs—so you can figure out the right solution for your needs and budget.
What Is a High-Deductible Health Plan?
A high-deductible health plan (HDHP) is a health insurance plan with a higher deductible than traditional plans, but typically lower monthly premiums. HDHPs work hand in hand with health savings accounts (HSAs), allowing members to set aside pre-tax dollars to pay for eligible healthcare expenses, including prescription medications. However, HDHPs must meet specific IRS thresholds for minimum deductibles and maximum out-of-pocket limits to be considered “HSA-eligible.”
For 2026, a “high deductible health plan” is defined by the IRS as a health plan with an annual deductible that is not less than $1,700 for self-only coverage or $3,400 for family coverage, and for which the annual out-of-pocket expenses do not exceed $8,500 for self-only coverage or $17,000 for family coverage.
When it comes to prescriptions, many HDHPs fully cover certain preventive medications before you meet your deductible. However, for most other drugs—including brand-name and specialty medications—you’ll pay the full cost until your deductible is met. After that, your plan begins to share the cost through coinsurance or copayments until you reach your out-of-pocket maximum.
How HDHPs Work
Here’s a closer look at the key components of HDHPs in 2026:
Premiums: Monthly premiums are typically lower than those for traditional PPO or low-deductible plans, which can reduce your regular paycheck deductions.
Deductibles: You must pay the full in-network negotiated rate for most non‑preventive services (such as office visits, labs, imaging, and many prescriptions) until you meet the annual deductible.
Cost-sharing after the deductible: Once you meet the deductible, the plan starts sharing costs through coinsurance (for example, you pay 20% and the plan pays 80%) until you hit the out‑of‑pocket maximum.
Out-of-pocket maximum: After you reach the in‑network out‑of‑pocket maximum, the plan generally covers eligible in‑network services at 100% for the rest of the plan year.
Preventive care coverage: Most HDHPs cover qualified preventive services at no cost when you use in‑network providers, even before you meet the deductible.
Chronic care design (plan-dependent): Some HDHPs classify certain chronic-condition services or medications as “preventive-like,” which may receive reduced cost sharing before the deductible, depending on how the plan is designed.
How HDHPs Work With HSAs
One of the main reasons HDHPs have grown in popularity is their link to HSAs. To contribute to an HSA, you must be covered by an HSA‑eligible HDHP and have no disqualifying coverage, such as a general-purpose flexible spending account (FSA). HSAs allow you to set aside pre-tax money for qualified medical expenses, including deductibles, copays, and eligible prescriptions like GLP‑1 medications when prescribed.
Pros and Cons of High-Deductible Health Plans
HDHPs offer many notable advantages for employees, particularly when it comes to certain health needs and use cases:
Lower premiums: HDHPs usually come with lower monthly payments than traditional plans, freeing up money for other expenses or HSA contributions.
HSA eligibility: You can pair your HDHP with an HSA, which lets you save pre‑tax dollars, grow them tax‑free, and spend them tax‑free on qualified medical expenses.
Potential long‑term savings: Lower premiums can mean spending less overall but still having protection against major medical costs.
While HDHPs can save money for some, they also come with trade‑offs that may not fit every budget or health situation:
High upfront costs: You’ll pay the full cost for most non‑preventive services until you meet your deductible, which can be tough for frequent care needs or costly prescriptions.
Risk of delayed care: Because of higher out‑of‑pocket costs, some people put off care, which can lead to bigger health issues and higher expenses down the road.
More budgeting required: To make the most of an HDHP, you’ll need to plan ahead—understanding how deductibles, coinsurance, and HSAs work together—to avoid surprises.
Who Is an HDHP For?
An HDHP can be a good fit for people who are generally healthy, use care infrequently beyond preventive services, and want to keep monthly premiums as low as possible. It can also work well for individuals or families who have the cash reserves—or consistent HSA contributions—to handle a large, unexpected bill without needing to carry a balance on a credit card or loan. For these members, pairing an HDHP with steady HSA savings can create a strong long-term strategy for both current and future healthcare expenses.
On the other hand, HDHPs can be challenging for people with multiple chronic conditions, those who expect significant procedures or specialty care, or households with limited emergency savings. In those cases, the risk of facing several thousand dollars in costs early in the plan year may outweigh the premium savings. For some, a plan with higher premiums but lower deductibles and copays may provide more predictable and manageable monthly spending.
Can HDHPs Help with GLP‑1 Costs?
GLP‑1 medications can be expensive, especially when prescribed for weight loss, and may be subject to the deductible and coinsurance under HDHPs. If your plan treats GLP‑1s for weight loss as non-preventive drugs, you may pay the full negotiated price until you reach the deductible, which can significantly increase early-year spending.
Pairing an HDHP with an HSA can help offset these costs if you contribute regularly and use the funds strategically, but this still requires careful budgeting. It’s important to check how your specific plan covers GLP‑1s, whether any prior authorization rules apply, and whether your employer or plan offers additional support programs.
Key Questions to Ask Before Choosing an HDHP
Before enrolling in an HDHP, consider asking:
What are the exact deductible and out-of-pocket maximum amounts for individual and family coverage?
How are common services (primary care, specialists, labs, urgent care, GLP‑1 prescriptions) covered before and after the deductible?
Does the plan qualify for HSA contributions, and if so, does the employer contribute to the HSA?
What would your total costs look like in a typical year versus a high‑use year compared with a lower-deductible plan?
Making High-Deductible Health Plans Work for You
High-deductible health plans can be a useful part of a cost-conscious benefits strategy, but they work best when paired with solutions that address the reality of high drug prices. Even when employees use HSAs to soften the impact of deductibles and coinsurance, many still struggle to afford GLP‑1s and other brand-name medications that are increasingly central to diabetes and obesity care. Employers, meanwhile, face unsustainable pharmacy spend if they try to cover these drugs through traditional insurance alone.
Andel is designed to close this gap—providing a member-centered pharmacy experience that expands access to GLP‑1s and other brand-name drugs at more affordable costs. Because Andel fits alongside current benefits and can be launched at any point in the plan year, it pairs naturally with HDHPs, HRAs, and HSAs to help employers control budgets and support employees’ needs.
High-Deductible Health Plan FAQs
What qualifies as a high-deductible health plan in 2026?
In 2026, an HDHP must have a minimum deductible of $1,700 for individual coverage or $3,400 for family coverage and a maximum in-network out-of-pocket limit of $8,500 for individuals and $17,000 for families. These thresholds are set annually by the IRS and determine whether a plan is HSA‑eligible. Plans that do not meet both the deductible and out-of-pocket maximum criteria cannot be paired with an HSA.
How do HDHPs interact with HSAs?
To contribute to an HSA, you must be enrolled in an HSA-eligible HDHP and have no disqualifying coverage, like a general-purpose FSA for medical expenses. HSA contributions reduce taxable income, can be invested, and can be used tax-free for qualified medical expenses, including deductibles, copays, and many prescriptions.
Are high-deductible health plans better than PPO plans?
Neither HDHPs nor PPOs are inherently “better”; they are designed for different needs. HDHPs usually have lower premiums and can be paired with HSAs, which offer strong tax advantages and long‑term savings potential. However, they require you to pay more out of pocket before coverage really kicks in. PPOs, on the other hand, often charge higher monthly premiums but have lower deductibles and more predictable copays, which can be easier to manage for people with ongoing medical needs or limited savings. The best choice depends on your typical health care usage, your ability to handle large bills if they arise, and whether you want to build tax‑advantaged savings through an HSA.
